What is a Non-current Asset?
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What is a Non-current Asset?
Non-current assets also known as fixed assets are long-term resources owned by a business. These are not intended for immediate sale but rather to help the business operate and generate revenue over time. Typically a non-current asset is expected to be used in the business for more than one year and they are essential for the day-to-day functioning of a business and are usually significant investments. Non-current assets can be divided into two main categories. The first category is tangible non-current assets. These are physical assets which you can see and touch. Examples of this include; buildings or premises, motor vehicles or delivery vans, computers and office equipment, machinery, and also fixtures and fittings. The second main category is intangible non-current assets. These are assets that you cannot physically touch but they still hold value for the business. Examples include; patents, copyrights, trademarks, and goodwill. So let's go back to our friend Redd who runs a delivery company. To get the business rolling Redd buys a delivery van. This van is not something that they plan to sell instead it is a resource to be used every day to deliver packages and also therefore earn revenue. Because the van is used in the business, will be used for more than one year, and also helps generate revenue, it qualifies as a non-current asset. Redd might also register a trademark for the business name and logo. That trademark is a non-current asset this is because it is used in the business, it will help protect the brand and also adds value to the business over time, and also will be used for more than one year.
